3 Dividend Stocks to Buy in an Aging Bull Market

The potential for an economic slowdown should drive investors to Saputo Inc. (TSX:SAP) and other dividend-yielding stocks.

| More on:
The Motley Fool

The bull markets in the U.S. and Canadian stock markets could be nine years old in March. The S&P/TSX Index rose 6% in 2017 and has risen by 0.61% to start 2018. A Bloomberg-Nanos consumer confidence index that covered the last week of 2017 found that Canadians have not been more confident in the economy since early 2009, as it started its recovery from the Financial Crisis.

Is this a case of irrational exuberance, or does the bull market have plenty of legs? In its Global Economic Prospects report released on January 9, The World Bank projected global economic growth would reach 3.1% in 2018. The report described this as a “short-term upswing” and listed a number of long-term concerns. Some of these risks include “softening productivity growth, weak investment, and the aging of the global labour force.”

Economic growth in advanced economies is expected to shrink from an average 2.2% growth in 2018 to 1.7% by 2020. The Organization for Economic Cooperation and Development (OECD) projected that Canadian GDP growth would drop to 1.9% by 2019.

With this in mind, let’s take a look at three stocks we can zero in on to prepare for a potential downturn.

BCE Inc. (TSX:BCE)(NYSE:BCE)

BCE is one of the largest telecommunications companies in Canada. The stock has dropped 4% to start 2018 as of close on January 12. In the third quarter, BCE saw its net earnings increase 2.1% to $817 million as service revenue and EBITDA grew 5.9% and 5.8%, respectively. BCE, like other telecommunications companies in 2017, was driven by strong wireless growth. It reported 198,005 wireless net additions in the third quarter — up 8.3% year over year.

The company also announced an attractive quarterly dividend of $0.72 per share, representing a 4.9% dividend yield. BCE has declared dividend growth for nine consecutive years.

Andrew Peller Ltd. (TSX:ADW.A)

Andrew Peller is a Grimsby-based company engaged in production, bottling, and marketing of wine and wine-related products. Alcoholic beverage retail demonstrated strong growth towards the end of 2017. The industry is also one of the most durable in the event of a recession. Andrew Peller stock has already climbed 5% to start 2018.

In the third quarter, sales were up 2.4% year over year, and adjusted earnings were $9.1 million compared to $6.8 million in the prior year. The company also announced a quarterly dividend of $0.05 per share, representing a 1.1% dividend yield.

Saputo Inc. (TSX:SAP)

Saputo is a Montreal-based marketer and distributor of dairy products. It is one of the 10-largest dairy processors in the world. Saputo stock has dropped 5.3% in 2017. Overall food prices are expected to increase 1-3% in 2018 with dairy only rising between 0% and 2%.

Lower sales volumes in Canada and higher volumes in the U.S. offset to produce a total revenue increase of 1.4% to $2.88 billion. However, net earnings were down 3.4% to $185.2 million. Saputo stock offered a quarterly dividend of $0.16 per share, representing a 1.5% dividend yield. The company has delivered dividend growth for 18 consecutive years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

More on Investing

open vault at bank
Dividend Stocks

Don’t Get Cute; Just Buy Stability: Top Defensive TSX Stocks to Buy Now

A healthy risk tolerance is essential for most investors, but many stray from the tried and tested, hoping to find…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

TFSA Investors: Buy These 3 Stocks for $3,480 Yearly Tax-Free Income

One significant benefit of a TFSA-based dividend income is that it doesn’t weigh down your tax bill.

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, November 8

The TSX Composite benchmark remains on track to end the week with strong optimism as it currently trades with 2.4%…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Are you looking for great income stocks? Here's a trio of high-yield dividend stocks that pay insane yields right now.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Bank Stocks

Best Stock to Buy Right Now: TD Bank or Manulife Financial?

Manulife continues to see momentum in its business and stock price, while TD Bank stock remains down and out.

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Transform a $5,000 TFSA Into a $50,000 Retirement Nest Egg

The TFSA is a powerful tool that can grow a small investment into a substantial retirement nest egg over time.

Read more »